POLITICS: Making Regulation Work Better

Rodney Hide used to chase taxis carrying overspending MPs. Since he went dancing with the stars he has been happier hunting regulators.
His Regulatory Responsibility Bill in 2006 lacked drafting rigour, Sir Geoffrey Palmer of the Law Commission said. But both Labour and National endorsed its general intent and under the National-ACT support agreement task force has been set up to “carry forward” the bill.
Hide wants bonfire of regulations. No centrist government will go along with that. But governments of centre-left and centre-right have become interested in making it easier to comply with regulation and, as logical extension, keeping regulation down to what is necessary to achieve policy objectives.
Labour’s Commerce Minister Lianne Dalziel got enthusiastic about this after talking to the Australian Productivity Commission. She contemplated similar enterprise here, as National is now.
Dalziel instituted “quality regulation review”. Drawing on business’ experiences, she set out to identify compliance problems which could be fixed without compromising policy or administrative objectives.
Late in the Labour government’s time, she developed tougher standard of departmental reporting on the impact of proposed legislation and regulation and the reasons why alternative options, including doing nothing, had been rejected. She brought the reports forward to when papers went to cabinet committees, to nip counterproductive regulation before it buds.
When Labour lost office last year, Dalziel left behind Regulatory Improvement Bill changing the Companies, Conservation, Designs, Fisheries, Gas, Hazardous Substances and New Organisms, Ministry of Agriculture and Fisheries Restructuring, Reserves and Weights and Measures Acts to “make small gains to improve the quality of specific regulatory environments”. It was to be the first of many such bills.
Where Dalziel took small steps, Hide wanted step-change: an economic cost-benefit analysis of all new and existing regulatory law. His bill would also have required compensation for taking property and abrogating common law rights and required government agencies to state the reasons for regulation, the effect on property and other legal rights and alternative options and to publish an official notice if departing from those principles.
The cost-benefit approach has some appeal to National ministers who see business-friendly regulatory environment as critical to lifting productivity growth. But that is long reach for the public service right now.
So that makes Sir William Sargent’s work in Britain of special interest. It falls between Dalziel and Hide.
Irish-born Sargent has his own digital imaging company, Framestore CFC, which he founded. In public life he is executive chair of Britain’s Better Regulation Executive, reporting to the Prime Minister. New Labour MP Jacinda Ardern worked in his team in London.
Sargent initially mined Dalziel’s work and then added bit more ambition. He set mandatory requirement for all government agencies to reduce “the burden of administration” on business by 25 percent and “public sector data burdens” by 30 percent by 2010. He applied it across the board, regardless of past track records.
The result, by his own measure, has been 240 “measures” and estimated total savings of about NZ$6 billion. The aim is twice that by May next year.
The diet is similar to New Zealand’s. Examples from the “top 10” measures: online tools for employers (the Labour Department here has done fair bit of that), workplace risk assessments are graded in complexity to match likely risk, self-certification of building work by qualified people, better guidance and more freedom in measuring equipment for food, reducing the number of licences landlords must have and simplifying gaming and alcohol licence applications.
The actual measures are important. Arguably more important is mindset change. That can take time. For example, to get Conservation Department fieldworkers to be more flexible or health and safety officers to work with, rather than against, employers is proving long process.
And there is political and administrative risk. When things go wrong, ministers are caned and they cane public servants. So they are tempted to over-regulate and over-enforce regulation to pre-empt canings.
To accommodate Hide’s ambitions would require nerves of steel in the Beehive and agency CEOs’ offices. The question Hide will need to ask of his new friends in John Key’s centrist government is how steely they will be when his regulatory task force reports.

Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist.

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